Boeing’s 2014 Outlook Disappoints; Shares Fall Almost 6%

By Johanna Bennett

Boeing (BA) couldn’t have wished for a better 2013. Its outlook for 2014, however, has disappointed investors.

Early Wednesday, the aerospace giant easily beat fourth-quarter forecasted earnings growth amid continued strong demand for its jet liners, but tempered its forecast for 2014, despite another planed record year for commercial aircraft productions.

Investors did not react well, sending Boeing falling 5.8% to $129.

Boeing delivered a record 648 commercial aircraft in 2013 and expects to beat that in 2014 with 715 to 725 deliveries, driven by increasing production of single-aisle 737s and long-range 787 Dreamliners. But year-end defense orders were down to $70 billion from $71 billion a year earlier, with a dip expected in profit margins in 2014.

Boeing’s sees earnings per share of $7 to $7.20 in 2014, which misses the $7.57 expected by analysts surveyed by Thomson Reuters. Revenue is forecast to climb to $87.5 billion to $90.5 billion in 2014. But that too missed expectations of $92.72 billion.

Analysts cautioned Boeing’s initial forecasts tend to be more conservative at the beginning of the year. Sterne Agee analyst Peter Arment suggested buying the shares. He wrote:

We view BA’s 2014 EPS/cash-flow guidance to be initially conservative given the year is just commencing and coupled with BA’s typical cadence of increasing mileposts as the year progresses. Investors should continue to add to BA at current level.

Boeing’s stock gained 84% in 2013 beating the average Aerospace & Defense company by more than 20 percentage points, thanks to a huge rush of orders from emerging economies, a dividend hike and other catalysts that also helped boost Airbus (EADSY). The stock wasnamed a top pick by Citigroup’s Jason Gursky.

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